Making Tax Digital (MTD) for Income Tax – Have You Got it Right?
12th June, 2025
In this blog, we’ll break down the key dates, software requirements, and penalties to help you understand your obligations and stay compliant.
What is Making Tax Digital?
The Government continues to streamline taxation with the aim to improve accuracy and efficiency by moving from paper record keeping to digital. The deadline for making tax digital is phased and is already underway for VAT-registered firms.
The MTD for income tax purposes deadline is fast approaching for many self-employed individuals and landlords.
When Will This Impact Me?
There are various staging dates for MTD based on the previous years reported gross income.
- From 6 April 2026, for those with combined annual gross income of over £50,000 from both self-employment and property letting, based on the 2024/25 tax year income level.
- From 6 April 2027, for those with combined annual gross income of more than £30,000 and up to £50,000 from both self-employment and property letting.
- From 6 April 2028, for those with combined annual gross income of more than £20,000 and up to £30,000 from both self-employment and property letting.
Software
A key part of MTD is ensuring that you have compatible software in place. There are three different types of compliant software:
- Software packages that can be used to record and process your accounting information which allow the filing of returns to HMRC.
- Application Programming Interface (API) enabled spreadsheets with an inbuilt function to file returns directly to HMRC.
- A bridging software to transfer the data from your existing spreadsheets and submit this to HMRC.
Deadlines
The income and expenditure quarterly submissions are due by the following deadlines:
- 6 April to 5 July (due by 7 August)
- 6 April to 5 October (due by 7 November)
- 6 April to 5 January (due by 7 February)
- 6 April to 5 April (due by 7 May)
- A final declaration then completes the self-assessment which is due by the normal Self-Assessment deadline of 31 January following the relevant tax year.
It is possible to elect for the update periods to tie in with a month end if this is more convenient.
Income tax payments will not be affected by the MTD programme and will be due by normal Self-Assessment deadline of 31 January each year.
Under some circumstances, it is possible to apply for an exemption from Making Tax Digital.
Penalties
HMRC have introduced a new penalty system for MTD. Penalty points will be issued for late submissions, not keeping digital records and not using the correct digital submissions.
You will receive a point each time you miss a submission deadline – either for the year end submission, or for a quarterly update. Points accumulate until the threshold of 4 points is reached after which £200 penalty is charged for any further late submissions. In order to reset the penalty position you must:
- Make all submissions on or before the due date for 12 months, and
- Submit all returns required for the previous 24 months.
If you need advice or assistance with implementation, please call to discuss your needs.
Terry started life at HM Revenue and Customs before moving to Ashdens and then on to BDO and Chantrey Vellacott, the combination of which has provided Terry with a wide breadth of experience which has proved invaluable when helping a broad range of clients with their tax affairs.
Whether it involves meticulously organising a client’s tax affairs or leveraging his expertise to mitigate their tax exposure, Terry has a passion for delivering tangible results.
